Abstract

This study investigates how revenue from the Southern African Customs Union (SACU) common revenue pool affects efforts to contain HIV/AIDS in Botswana, Lesotho, Namibia and Swaziland (BLNS countries). Using a dataset for the BLNS countries covering the period 1990-2007 in annual frequency and a health production function, the study estimates a dynamic panel using the Arellano-Bond (1991) difference Generalised Method of Moments. The study results show that an increase in either SACU revenue or aggregate government expenditure increases HIV prevalence rates. Disaggregating the government expenditures into health and non-health outlays reveals that the health expenditure component decreases HIV prevalence rates. To be precise, the study finds that HIV prevalence rates decline when public health expenditures as a percentage of GDP and public health expenditures as a percentage of total government expenditures increase. It is argued, therefore, that the type of public expenditure is of consequence: public health expenditures decrease, while public non-health expenditures increase the HIV prevalence rates, with the ultimate direction of HIV prevalence rates determined by the dominant of the two effects.